How Does Government Fixes Cost With The Cost-Plus Contract?
Cost-plus contract From Wikipedia, the free encyclopedia Jump to: navigation, search A cost-plus contract, more accurately termed a Cost Reimbursement Contract, is a contract where a contractor is paid for all of its allowed expenses to a set limit plus additional payment to allow for a profit.[1] Cost reimbursement contracts contrast with fixed-price contract, in which the contractor is paid a negotiated amount regardless of incurred expenses. Contents [hide] * 1 Types * 2 Usage * 3 Pros and cons * 4 Recent trends * 5 See also * 6 References * 7 External links [edit] Types There are four general types of cost reimbursement contracts, all of which pay every allowable, allocatable, and reasonable cost incurred by the contractor plus a fee or profit which differs by contract type. * Cost Plus Fixed Fee contracts pay a pre-determined fee that was agreed upon at the time of contract formation. * In a Cost-Plus-Incentive Fee contract, a larger fee is awarded for contracts which meet or exce
A cost-plus contract, more accurately termed a Cost Reimbursement Contract, is a contract where a contractor is paid for all of its allowed expenses to a set limit plus additional payment to allow for a profit.[1] Cost reimbursement contracts contrast with fixed-price contract, in which the contractor is paid a negotiated amount regardless of incurred expenses. Usage A cost reimbursement contract is appropriate when it is desirable to shift some risk of successful contract performance from the contractor to the buyer. It is most commonly used when the item purchased cannot be explicitly defined, as in research and development, or in cases where there is not enough data to accurately estimate the final cost. [edit] Pros and cons Advantages: * In contrast to a fixed-price contract, a cost-plus contractor has little incentive to cut corners. * A cost-plus contract is often used when long-term quality is a much higher concern than cost, such as in the United States space program. * Final c
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- How Does Government Fixes Cost With The Cost-Plus Contract?
